Saturday 10th March 2012

Entrepreneurs often pitch their ideas as “the X of Y”. Match.com for farmers… Foursquare for parking lots… Gilt Groupe for grandparents. It is both efficient and lucrative to take what already works and extend it to a new niche, a new country or a new context. Innovation through localization or specialization has launched many successful businesses.

On the flip side, say you have a truly innovative and disruptive idea. Good for you! That’s only the beginning. Companies like Groupon and Gilt launched with unique business models, but now they each have a slew of imitators and have spent fortunes to stay at the front of the pack. In a time of easy capital, fast development and expensive intellectual property rights, how else besides capital can a company stay defensible?